Republicans Hoping To Stage '90s Return To Reaganomics

January 15, 1995|by DAVID E. SANGER, The New York Times!

All over the Capitol these days the talk is of a Reagan revolution redux, a triumphant return by Republicans to an era of small government and more reliance than ever on the magic of the private sector. This time, of course, they say they will avoid running up $2 trillion in accumulated deficits.

Supply-side theories for raising government revenue by cutting taxes and stimulating the economy have risen anew. Republicans say the only problem with Ronald Reagan's vision is that no one took it far enough.

"I think Reaganomics was an incredible success," Rep. Richard Armey, the Texas Republican who is now the House majority leader, told reporters over breakfast Jan. 6. "We ought to stand up and be proud of the '80s."

Armey and his colleagues walk around the Capitol brandishing Reagan's old hit lists for elimination from the federal budget: The Interstate Commerce Commission, now 107 years old and the survivor of several previous assassination attempts, the National Endowment for the Arts and the Departments of Energy, Education, and Housing and Urban Development.

But in their less hyperbolic moments, the new Republican leaders acknowledge that while Reagan sounded the call of smaller government, as president he did very little shrinking. And his record casts doubt about how much of a dent the new majority will be able to make, either.

"This may make people feel good about their government, and that has some political significance," Warren Rudman, the former Republican senator from New Hampshire who has led many battles to cut the deficit, said the other day. "Unfortunately, it doesn't have any fiscal significance."

The number of federal programs cut out of the budget during the eight years of the Reagan administration, from 1981 to 1989, can be counted on the fingers of one hand.

Moreover, despite the oratory, the government's huge share of the national economy barely budged. It amounted to 22.9 percent of the Gross Domestic Product the day Reagan arrived in Washington. It was 22.1 percent when he left, and exactly 22 percent in 1994.

Meanwhile, the budget deficit soared beyond imagining, fueled by tax cuts and increased spending for the military. In the last two weeks the Clinton administration and the new congressional majority have been arguing over whether the blame for that huge increase belongs to Reagan's wildly optimistic estimates of how his tax cuts would stimulate the economy, or to a Congress controlled by Democrats who were unwilling to cut and slash.

It is an argument with no easy answer, as it is impossible to know what the nation's tax revenue would have looked like without the Reagan plan or how much Reagan would have cut from the budget had he been given a free hand by the Democrats.

Whatever the answer, Republicans revving up their spread sheets these days are rediscovering a harsh truth that remains unchanged from the 1980s: Even if they cut the 100 programs at the top of House Speaker Newt Gingrich's list, the effect on a $200 billion annual federal deficit will be minimal.

Take the Interstate Commerce Commission, a favorite target of budget cutters because its rows upon rows of examiners wade through 16,000 pages a day of rates set by the nation's trucking and rail companies, even though deregulation has left the ICC largely without power to change those rates. Eliminating the agency would save roughly $40 million, or less than one-fiftieth of 1 percent of the federal deficit last year.

But the numbers are less important these days than the congressional mood, as Rep. Bud Shuster, R-Pa., discovered in recent weeks.

Shuster has consistently opposed eliminating the ICC, but no sooner had he taken his post as new head of the committee overseeing the transportation industry than he declared he had seen the Newtonian light.

"Now I may not be too smart," he said at the panel's first meeting last week, "but I'm not Louie off a pickle boat. And I know the ICC is going to be eliminated. So I think that as the band master I should run and get in front of the band, and I now support the elimination of the ICC." He then went on to describe how some of the ancient agency's functions should be transferred elsewhere in the government.

"It's pretty appalling," said Lawrence Chimerine of the Economic Strategy Institute, an economic research group. "Even if they cut welfare, the subsidy for Amtrak, the National Endowment for the Arts, you are talking about chicken feed. The reduction in spending is a lot less than you would think, and a lot less than all these enthusiastic freshmen in Congress think."

Republican leaders acknowledge that cutting away at bureaucracy might not contribute much to budget balancing, but they argue that there is a higher purpose at work.

"When you talk about eliminating Commerce or the Small Business Administration, which are responsible for more mischief than most parts of the government, you are talking about freeing up the private sector," Armey said.